Last week was a nice bullish engulfing candle for the USD. One could make the case for the recent low of 72.69 being an Elliott wave two. This would suggest that the price behavior for the last two years from the 89.63 high was a complex, double zigzag correction (WXY). One could also argue against this, i.e. the move that ended at 88.66 was an ABC correction with the downtrend now resuming.
Another way to look at the weekly chart is as a contracting rectangle. I like this interpretation as it is simple, in line with Occam's Razor. The top of the rectangle is at 88. However, whether one chooses the optimistic Elliott interpretation or the rectangle one, the next move should be up. If the buck can climb above 75 then next resistance is at 75.82, then 78.87 and 81.45. Support is obviously the recent low of 72.69, then 71.31 and 70.67.
Here is the weekly chart:
© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
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